Oil downturn continues to hit Aberdeen hard

Developers behind an ambitious regeneration scheme near Aberdeen rail station have walked away from the deal as the oil and gas downturn continues to chill investors.

Atholl Square Developments, which had submitted plans for student accommodation, a hotel and new civic square on Guild Street pulled out of the scheme despite losing a £1.5million deposit with the current owner of Atholl House.

In August last year, CLS Holdings, a listed property company, revealed it had exchanged contracts on a deal to sell Atholl House. As a result, several tenants including charity Cornerstone moved out ahead a planned demolition of the office building.

CLS has now put the offices back on the market through estate agents Knight Frank and Savills.

And while Knight Frank partner Eric Shearer expects the office to be popular with tenants due to its location, it is unlikely the regeneration scheme will go ahead under current or different ownership due to lack of investor demand.

Mr Shearer said: “I think they realised what was happening in Aberdeen with the decline. They had also gone to market to get an investor to buy it. There was no interest in it.

“It was an unusual and complex scheme, part student, part retail, part office and part hotel.

“It will let as offices – it is in a good location.”

Edinburgh-based Atholl Square Developments revealed plans to demolish the office building and build shops, 413 student accommodation units, and a 192-room hotel.

At the time, the firm said “we feel confident that this scheme will inject new vitality and activity into this area of the city, enabling much improved connectivity”.

Trade magazine Property Week said Simon Wigzell, head of group property at CLS, said the company would re-let the offices as it attempted to secure planning itself for the scheme following the collapse of the sale.

It is thought the collapse of the deal will delay plans proposed by Network Rail to bring two further rail platforms at the station back into use once Atholl House was demolished.

CLS and Atholl Square Developments were unavailable for comment

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